Did Globalisation Influence Credit Market Deregulation?

We investigate whether globalisation influenced credit market deregulation over the period 1970-2010. Globalisation is measured by the KOF indices of globalisation. Credit market deregulation is measured by the credit market freedom indicators of the Fraser Institute. The results from both cross-sectional and panel regressions using ordinary least squares indicate a positive correlation between globalisation and credit market deregulation. We account for reverse causality using predicted trade openness as an instrumental variable and show that this approach gives rise to different conclusions. Two-stage least squares estimations do not show that globalisation had a causal influence on credit market deregulation.